Jean-Pierre Roth, 73, has gone through many economic and financial crises. He was chairman of the executive board of the Swiss National Bank from 2001 to the end of 2009, during the financial crisis. Reached by phone, he expresses his opinion on the fall of the financial markets.
Le Temps: What financial crisis is closest to that of today?
Jean-Pierre Roth: The fall in the stock market this year is reminiscent of the crash of October 1987, when the Dow Jones index lost 22.6% in one session to fall below 2000 points. Looking at the curves of the long-term stock market indices highlights how much prices recovered afterwards. The same index is trading just below 20,000 points Thursday night.
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We let ourselves be impressed by a fall in prices for a few days, but we ignore the tremendous recovery capacity of the markets. Economic production slowed sharply this winter, but production capacity has remained intact and poised for a future recovery.
Covid-19 and the economy
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Won’t the economic downturn force many businesses to declare bankruptcy?
Everyone remembers the words of Mario Draghi when he was President of the ECB and announced that he would do whatever it takes (whatever it takes) to save the euro. Authorities are sure to do whatever it takes to help businesses overcome this challenge. The economic system remains intact.
Many economists see structural effects to this crisis, such as the end of globalization. What do you think?
I do not share this opinion. The market is more integrated than ever, technologically and humanly. These are the risk management measures that could be improved to take into account the lessons to be learned from a health crisis such as a pandemic.
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Can closings of countless traders and SMEs be prevented?
Governments show that they firmly intend to prevent these closings and to ease the burdens on businesses in all sectors. It is up to them to show imagination and present suitable and flexible solutions, for example in terms of tax or lightening of charges. There is a strong will on their part to prevent a health crisis from turning into an economic crisis.
Hasn’t international cooperation decreased, compared to the 1980s or 1990s, to resolve this crisis?
No, central bank action is perfectly coordinated, as usual. It is up to each government to react according to the local situation and to choose the appropriate instruments to prevent an economic crisis.
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